Renewing Matas progress year one R ESULTS U PDATE 28 M AY 2019 A - - PowerPoint PPT Presentation

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Renewing Matas progress year one R ESULTS U PDATE 28 M AY 2019 A - - PowerPoint PPT Presentation

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Renewing Matas progress year one R ESULTS U PDATE 28 M AY 2019 A NNUAL R EPORT 2018/19 Highlights Q4 2018/19 results with positive like-for-like (2.1%) and continued gross margin stabilisation FY 2018/19 results in line with

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SLIDE 1

RESULTS UPDATE 28 MAY 2019 – ANNUAL REPORT 2018/19

‘Renewing Matas’ – progress year one

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SLIDE 2

Highlights

✓ Q4 2018/19 results with positive like-for-like (2.1%) and continued gross margin stabilisation ✓ FY 2018/19 results in line with guidance ✓ Progress on all strategic tracks – online sales at 11% in Q4 2018/19 of group sales up from 4% a year earlier ✓ Acquisition of Kosmolet A/S – adding the leading make-up brand to our own brand portfolio ✓ Dividend per share of DKK 3.00 reflecting acquisitions and investment ramp-up ✓ Guidance FY 2019/20 with topline growth, positive LFL and planned CAPEX ramp-up ✓ Margin contraction due to dilutive effect of online and “investment” in resources to drive growth ✓ Dividend pay-out ratio of minimum 30% of adjusted net profit after tax

Matas Q4 2018/19 Results Update 2

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SLIDE 3

CEO comment: Progress on our strategic ambitions towards 2022/23

GROW REVENUE

(GROWTH YOY)

SECURE EARNINGS

EBITDA MARGIN BEFORE EXEPTIONAL ITEMS

LIFT CUSTOMER ENGAGEMENT 70 (index 100)

* Before effect from IFRS 16 of around 4%-points uplift.

Index 100 2018/19 target

3

64 (index 100) 2018/19 actual 2022/23 ambitions Around DKK 4 bn DKK 3.5 bn DKK 3.5 bn (2.2%) Above 14%* Above 15% 15.5%

Matas Q4 2018/19 Results Update

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SLIDE 4

Win online: Strong progress in 2018/19

4

Q4 ONLINE REVENUE* IN % OF TOTAL REVENUE

4%

IN Q4 2017/18

11% IN Q4 2018/19

MATAS.DK IN 2018/19

54% GROWTH FROM 2017/18 5%

OF 2018/19 TOTAL REVENUE

ANNUAL ONLINE REVENUE IN % OF TOTAL REVENUE

4%

IN 2017/18

7%

IN 2018/19

Online revenue* (% of total revenue) 2018/19 2017/18 YoY growth Q4 2018/19 Q4 2017/18 matas.dk 5.3% 3.5% 54% 6.0% 4.1% Firtal Group 1.8%

  • 5,3%
  • Matas Group

7.1% 3.5% 106% 11.2% 4.1%

ONLINE GROWTH FUELLED BY

  • INVESTMENTS IN MATAS.DK INCLUDING
  • INCREASED MARKETING AND SOCIAL MEDIA

EFFORTS

  • FASTER DELIVERY
  • NEW SUBSCRIPTION FEATURE
  • PURCHASE OF FIRTAL INCLUDING HELSEBIXEN.DK,

JALA-HELSEKOST.DK AND MADE4MEN.DK

* Includes revenue from Firtal Group for the period 13 November 2018 to 31 March 2019.

Matas Q4 2018/19 Results Update

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SLIDE 5

Reignite store growth: 2018/19 has been a year of continued progress

5

UNDERLYING PHYSICAL STORE REVENUE DEVELOPMENT

MORE POSITIVE THAN IN 2017/18

STORE NETWORK

11

UPGRADES, MERGERS AND NEW LOCATIONS

4

MATAS LIFE CONCEPT STORES

NEW PRODUCTS & BRANDS*

14%

BRAND ROTATION

125 NEW BRANDS WITH 3,100 NEW PRODUCTS

# 2018/19 2017/18 New Removed Brands* 900 875 125 100 Products* (SKU) 33,500 33,300 8,600 8,400

  • from new brands

3,100

  • from existing brands

5.500

Matas Q4 2018/19 Results Update

* Matas only.

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SLIDE 6

New growth paths: Strengthening Matas’ position in the green market

6

Matas.dk/natur

Partnerships

2 Matas Natur Concept Stores Green shop-in-shop in Matas Firtal Group Partnerships 2018/19 VITAL

GROWTH OF

12.6%

Matas Q4 2018/19 Results Update

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SLIDE 7

Change how we work PROMOTIONAL EFFECTIVENESS DATA AND DIGITAL COMPETENCIES

Visuals

SUPPLIER ALIGNMENT

Matas Q4 2018/19 Results Update 7

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SLIDE 8

Key figures for 2018/19 and 2017/18

2018/19 2017/18 Growth DKK million YoY Revenue 3,541 3,465 2.2% Gross profit 1,589 1,549 2.6% Other external costs 355 320 11.0% Staff costs 704 695 1.3% EBITDA 530 535

  • 0.9%

Amortisation and depreciation 166 166 0.5% Operating profit (EBIT) 363 369

  • 1.5%

Net financials 22 20 9.0% Profit before tax 342 349

  • 2.1%

Tax on profit for the period 79 69 14.4% Profit for the period 263 280

  • 6.2%

Special items 19 20 EBITDA before special items 549 555

  • 1.1%

Adjusted net profit 343 356

  • 3.6%

Gross margin 44.9% 44.7% EBITDA margin 15.0% 15.4% EBITDA margin before special items 15.5% 16.0% Diluted earnings per share, DKK 6.93 7.43 Tax rate 23.0% 19.7%

Comments

  • 2.2% revenue growth
  • Beauty (71.3% of total sales) increased 1.7%
  • High-end beauty (38.0% of total sales)

increased 3.5%

  • Mass beauty (33.3% of total sales)

decreased 0.2%

  • Vital increased 12.6%
  • Material increased 1.2%
  • Medicare decreased 0.7%
  • Other and Wholesale etc. decreased
  • Gross profit increase of DKK 40 m or 2.6% driven by

higher sales and a marginal increase in GM due to smarter campaigns and improved price management

Matas Q4 2018/19 Results Update 8

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SLIDE 9

REVENUE GROWTH

Long term trends in Sales, Gross Margin and EBITDA margin

Q3

  • 1.4%

1.3% 0.3%

Q1 16/17 Q4 15/16 Q1 18/19 Q3 Q2

2.5%

Q4 Q1 17/18 Q2 Q3

  • 2.6%

Q4 Q2

2.1% 0.5%

Q4

  • 1.3%

12m trailing LFL growth Like-for-like growth

EBITDA MARGIN

BEFORE SPECIAL ITEMS

Q2

45.9% 46.9% 46.2%

Q4 15/16 Q3

44.7%

Q1 16/17

45.7%

Q2 Q4 Q1 17/18 Q4 Q3

44.4%

Q4 Q1 18/19 Q2 Q3

44.9% 45.6%

Gross margin LTM gross margin

GROSS MARGIN INVENTORIES

DKK M

766 737 741 693 756 773 790 749 792 799 902 786

Q3 Q4 Q1 Q2 2018/19 2016/17 2017/18

17.7% 15.5% 18.8%

Q4 Q2 Q4 15/16

10.9%

Q1 17/18

15.2%

Q3 Q1 16/17 Q2 Q2 Q3

16.0%

Q4 Q1 18/19 Q3

11.6% 15.5%

Q4 EBITDA margin before special items LTM EBITDA margin before special items

Matas Q4 2018/19 Results Update 9

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SLIDE 10

Cost development in 2018/19

DKK million 2018/19 2017/18 Growth YoY Other external costs (OEC) 355 320 11% OEC as a percentage of revenue 10% 9% Staff costs 704 695 1% Non-recurring staff costs 5 14 Staff costs as a percentage of revenue 20% 20% Total costs 1,059 1,015 4%

Other external costs up DKK 35 m YoY:

  • Operating costs from Firtal Group from 13 November

2018 to 31 March 2019, including marketing expenses

  • Higher activity on matas.dk, including costs relating

to webshop operations, freight and logistics

  • Transaction costs in connection with the acquisition
  • f Firtal Group.

Staff costs up DKK 9 m YoY:

  • Non-recurring costs fell DKK 9 m compared to 17/18
  • For 2018/19, DKK 5 m were related to executive

changes in Matas

  • For 2017/18 DKK 14 m were related primarily to

the change of CEO

  • Staff costs rose by DKK 6 m from The Firtal Group

acquisition

  • Underlying staff costs (LFL) up by DKK 12 m or 1.8%

primarily due to collective wage agreements

Matas Q4 2018/19 Results Update 10

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SLIDE 11

Cash flow and working capital in 2018/19 and 2017/18

DKK million 2018/19 2017/18 Change YoY Cash generated from operations* 566 506 60 Paid interest and taxes 115 123 8 Cash flow from operating activities 451 384 68 CAPEX 128 93

  • 36

Acquisition of subsidiaries and

  • perations

111 10

  • 101

Cash flow from investing activities 239 102

  • 137

Free cash flow 212 282

  • 69

Cash flow and working capital developments

  • Cash generated from operations, including changes

to working capital, increased DKK 60 m

  • Net working capital rose DKK 68 m due to the

reclassification of a DKK 79.6 m receivable from Corporation tax receivable to Other receivables.

  • Underlying NWC actually fell marginally as

increased inventories were financed by higher debt to suppliers

  • Paid Taxes and interest fell marginally to DKK 115 m

from DKK 123 m in 2017/18

  • CAPEX increased DKK 36 m due to increased

investments in stores and online

  • Acquisitions jumped DKK 101 m due to the Firtal

acquisition

  • In consequence Free cash was DKK 212 m, down

DKK 69 m.

* Including changes to working capital.

Matas Q4 2018/19 Results Update 11

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SLIDE 12

IFRS 16 effects

DKK million 2018/19 IFRS 16 2018/19 Adjusted Lease assets (right of use assets)

  • 950

950 Total property, plant and equipment 950 950 Total assets 5,539 950 6,489 Equity and liabilities Total equity 2,621 2,621 Lease liability

  • 798

798 Total non-current liabilities 798 798 Lease liability 152 152 Total current liabilities 152 152 Total liabilities 950 950 Total equity and liabilities 5,539 950 6,489

IFRS 16 effects on EBITDA margin and balance sheet

  • The introduction of IFRS 16 is expected to

increase the EBIDTA margin by about 4 percentage points.

  • For 2018/19 the EBITDA margin before

exceptional items is expected between 18 and 19 % after effects from IFRS 16

  • In addition IFRS 16 will lead to a technical

increase in Matas’ debt of around DKK 950 m, while increasing assets by the same amount

Matas Q4 2018/19 Results Update 12

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SLIDE 13

LIVE OUR PURPOSE: BEAUTY & WELLBEING FOR LIFE CHANGE HOW WE WORK WIN

ONLINE

1 5

OPEN NEW

GROWTH PATHS

REIGNITE STORE

GROWTH

2 3 4

Our 2023 strategy: ‘Renewing Matas’

Matas Q4 2018/19 Results Update 13

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SLIDE 14

Grow the #1 Danish make up brand together

Harvest synergies Growth sales

Distribution Marketing & Media Ecommerce & customer insight Wholesale #1 brand with growth potential Product development & Sourcing

Matas x Kosmolet A/S: Strengthening Matas’ own brand portfolio

14 Matas Q4 2018/19 Results Update

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SLIDE 15

Strategic, low-risk acquisition with tangible synergies and additional growth potential

INVESTMENT RATIONALE

✓ #1 make-up brand in Matas with consistent growth ✓ Strengthen Matas’ own brand portfolio in key category (Beauty) ✓ Increase own brand share of sales ✓ Margin expansive: access to larger part of value chain ✓ Additional growth potential in Nilens Jord ✓ Low-risk acquisition due to simple company structure and Matas’ position as largest customer and 27 yr. track record with Matas ✓ Limited integration issues and fast realisation of synergies (12 months)

DEAL HIGHLIGHTS

✓ 2017/18 EBITDA of DKK 19.4 m ✓ Annual sales and cost synergies of DKK more than 5 m ✓ Enterprise value for Nilens Jord of DKK 145 m ✓ DKK 135 m in cash at closing ✓ DKK 10 m in shares ✓ 2017/18 EV/EBITDA multiple of 7.5x pre-synergies and 5.8x post-synergies ✓ Earn-out agreement of up to DKK 20 m based on short term financial performance ✓ Deal contingent on confirmatory due diligence – expected closing in June ✓ Continued operation as stand alone company

Matas Q4 2018/19 Results Update 15

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SLIDE 16

Financial targets for 2019/20

16

UNDERLYING REVENUE GROWTH (LFL) EBITDA MARGIN BEFORE SPECIAL ITEMS REVENUE GROWTH CAPEX 0.5 – 2.5% 14 – 15%* 3.5% – 6.5% DKK 200 – 220 m

* The effect of IFRS 16 on the EBITDA margin is expected to be an increase of around 4 %-point. Matas Q4 2018/19 Results Update

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SLIDE 17

Financial targets for 2019/20, continued

17

TOPLINE REVENUE EBITDA MARGIN BEFORE SPECIAL ITEMS

  • FY effect of Firtal
  • One more trading day
  • Potential opening of stores
  • Minimal effect of Kosmolet A/S
  • Supplier alignment
  • Promotional effectiveness
  • Data and digital competencies
  • Kosmolet A/S acquisition

UNDERLYING REVENUE GROWTH (LFL)

  • Omni-channel growth

CAPEX

Increase to fuel investments in store network & Matas Life, online growth and IT to ensure longer term financial ambitions

  • Potential closure of stores
  • Online competition
  • Short term margin dilution from
  • nline growth
  • Declining footfall
  • Price competition

Tailwinds Headwinds

Matas Q4 2018/19 Results Update

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SLIDE 18

Capital allocation

GEARING INVESTMENTS DISTRIBUTION

1 2 3

Matas’ capital allocation principles are unchanged

  • A gearing of between 2.5 and 3 times EBITDA to net interest

bearing debt. The gearing ratio should not materially exceed 3 for longer periods of time

  • Investments including CAPEX
  • Distribution

Dividends, gearing and total investments for 2018/19

  • A proposed dividend of DKK 3.00 per share, equivalent to

33% of adjusted net profit or DKK 115 m based on

  • A gearing of 2.7 at end 2018/19 within financial ambitions
  • Total investments of DKK 239.0 m, incl. CAPEX of DKK 128.3

m and the acquisition of Firtal of DKK 110.7 in line with financial targets for 2018/19

  • Matas’ loan agreements are based on pre-IFRS 16 net

interest bearing debt and EBITDA definitions Going forward, a payout ratio of minimum 30% of adjusted net profit is expected.

Matas Q4 2018/19 Results Update 18

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SLIDE 19

Q&A

Matas Q4 2018/19 Results Update 19

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SLIDE 20

Income statement for Q4 2018/19 vs. Q4 2017/18

2018/19 2018/19 2018/19 2018/19 2017/18 Growth DKK million Q4 Q3 Q2 Q1 Q4 Q4 vs Q4 Revenue 828 1,093 777 844 769 7.6% Gross profit 377 481 349 382 342 10.4% Gross margin 45.6% 44.0% 44.9% 45.2% 44.4% Other external costs 101 96 85 74 93 8.3% Staff costs 184 180 165 175 167 10.1% EBITDA 93 205 99 133 82 13.3% Amortisation and depreciation 43 42 43 38 47

  • 8.1%

Operating profit 49 163 56 95 35 42.4% Net financials 6 6 5 4 4 45.2% Profit before tax 43 157 51 91 31 42.0% Tax on profit for the period 10 35 14 20

  • 1
  • 933.3%

Profit for the period 33 122 37 71 32 5.0% Diluted Earnings per share, DKK 0.87 3.21 0.97 1.87 0.84 3.7% EBITDA margin 11.2% 18.7% 12.8% 15.8% 10.6% Special items 3 1 9 5 2 EBITDA before special items 96 206 109 138 84 EBITDA margin before special items 11.6% 18.8% 14.0% 16.4% 10.9% Tax rate 23.1% 22.0% 28.1% 22.0%

  • 3.9%

Adjusted net profit 53 140 61 90 47 12.1%

Matas Q4 2018/19 Results Update 20

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SLIDE 21

Overview: Q4 2018/19 vs. Q4 2017/18

95.7

2.0

Q4 18/19 Q4 17/18 83.7

3.1

Q4 17/18 769.3 827.7 Q4 18/19

+7.6% LFL 2.1%

47.0 Q4 17/18 52.7 Q4 18/19

Cost (DKK) Revenue (DKK m)

  • Adj. net profit (DKK m)

Gross margin (%)

166.8

  • 2.0

93.3

Q4 18/19 Q4 17/18

101.0

  • 3.1

183.6

258.1 281.5

+9.0%

Transactions (# m) Basket size (DKK)

Q4 17/18

  • 14.5

Q4 18/19 6.3

Free cash flow (DKK m)

EBITDA Special items

45.6 44.4 Q4 17/18 Q4 18/19 Q4 18/19 4.9 Q4 17/18 4.8

  • 0,9%

154.4 159.9 Q4 17/18 Q4 18/19

+3.5%

EBITDA BEFORE SPECIAL ITEMS (DKK m)

Special items Other external costs Staff costs

Matas Q4 2018/19 Results Update 21

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SLIDE 22

Underlying revenue (like for like) calculations

Like for like assumptions

  • A store is part of the LFL calculation after 13

months

  • matas.dk is counted as one store in LFL
  • Merged stores and new stores are included in

LFL after 13 months

  • Firtal Group will be included in LFL from

December 2019 (4 months of 2019/20)

  • Kosmolet A/S will not be included in LFL in

2019/20

2018/19 2017/18 Q4 2018/19 Q4 2017/18 Revenue growth 2.2%

  • 1.3%

7.6%

  • 2.7%

Underlying revenue growth (LFL) 0.5%

  • 1.4%

2.1%

  • 2.6%

Stores in LFL calculation* (#) 273 270

  • Stores in total* (#)

280 281

  • * Number of stores end of period incl. matas.dk. Excluding Firtal Group.

Matas Q4 2018/19 Results Update 22

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SLIDE 23

LISTED ON

NASDAQ

OMX 28 JUNE 2013

DKK 2.6

BN MARKET CAP

100%

FREE FLOAT

38.3 m

SHARES IN ONE SHARE CLASS XXX

~39%

DOMESTIC SHAREHOLDERS

The Matas share

Matas Q4 2018/19 Results Update 23

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SLIDE 24

Trading days 2016/17 to 2019/20

Matas Q4 2018/19 Results Update 24

75 72 73 71 79 79 78 79 77 76 76 76 77 75 76 77 2018/19 2016/17 2017/18 2019/20 Q1 Q3 Q2 Q4

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SLIDE 25

Team

Matas Q4 2018/19 Results Update 25

Gregers Wedell-Wedellsborg

CEO gww@matas.dk +45 4816 5555

Anders Skole-Sørensen

CFO as@matas.dk +45 4816 5555

Elisabeth Toftmann Klintholm

Head of IR & Corporate Affairs

etk@matas.dk +45 4816 5548

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SLIDE 26

Forward Looking Statements

This presentation contains statements relating to the future, including statements regarding Matas A/S’ future operating results, financial position, cash flows, business strategy and plans for the future. The statements can be identified by the use of words such as “believes”, “expects”, “estimates”, “projects”, “plans”, “anticipates”, “continues” and “intends” or any variations of such words or other words with similar meaning. The statements are based on management’s reasonable expectations and forecasts at the time of the disclosure of the interim report. Any such statements are subject to risks and uncertainties and a number of different factors, of which many are beyond Matas A/S’ control, can mean that the actual development and the actual result will differ significantly from the expectations contained in the interim report. Without being exhaustive, such factors include general economics and commercial factors, including market and competitive matters, supplier issues and financial issues.

Matas Q4 2018/19 Results Update 26